commercial law essay

The Sale Of Goods Contracts

"Sale of Goods contracts are, without doubt, both the most common and the most important of all commercial contracts." This statement is true. No business takes place without contract. Contract cannot be formed without the agreement. Contract and Agreement are important in front of law. All kinds of contracts are implied within the sale of goods Act 1896. We no need to search for new terms to make contracts. Everything is available in the Sale of goods Act 1896.

Conditions:

There are many conditions for the buyer and seller to make an agreement and contract in Sale of goods Act 1896. There are five rules for passage of property.

Rule 1: Where there is an unconditional contract for the sale of specific goods in a deliverable state, property passes when the contract is made.

Rule2: Where there is a contract for the sale of specific goods , and the seller is bound to do something to the goods to put them in a deliverable state, property does not passes until that thing has been done and the buyer has notice it has been done.

Rule 3: Where there is a contract for the sale of specific goods in a deliverable state but the seller has to weigh or do something to the goods to determine the price, property does not pass until the seller has done that thing and the buyer has notice it has been done.

Rule 4: (1)When goods are delivered to the buyer on approval or ‘on sale or return’ or other similar terms the property therein passes to the buyer—

(a) when the buyer signifies the buyer’s approval or acceptance to the seller, or does any other act adopting the transaction;

(b) if the buyer does not signify the buyer’s approval or acceptance to the seller but retains the goods without giving notice of rejection, then, if a time has been fixed for the return of the goods, on the expiration of such time, and, if no time has been fixed, on the expiration of a reasonable time.

(2) What is a reasonable time is a question of fact

Rule 5: When there is a contract for the sale of unascertained or future goods by description, and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer, or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer.

Terms of a contract:

As with terms in all contracts , the terms of a sale of goods contract can be express or implied. Conditions are the essential terms. Warranties are lesser and non essential. The Act preserves the buyer’s right to treat any breach of condition as a mere breach of warranty and therefore to sue for damages and continue with the contract.

Implied terms:

Title:

In a contract of sale, unless the circumstances of the contract

are such as to show a different intention, there is—

An implied condition on the part of the seller that in the case of a sale the seller has a right to sell the goods, and that in the case of an agreement to sell the seller will have a right to sell the goods at the time when the property is to pass

An implied warranty that the buyer shall have and enjoy quiet possession of the goods;

An implied warranty that the goods shall be free from any charge or encumbrance in favour of any third party,not declared or known to the buyer before or at the time when the contract is made.

sale by description:

When there is a contract for the sale of goods by description there is an implied condition that the goods shall correspond with the description; and if the sale is by sample, as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description.

Quality or fitness:

when the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller’s skill or judgment, and the goods are of a description which it is in the course of the seller’s business to supply (whether the seller is the manufacturer or not), there is an implied condition that the goods shall be reasonably fit for such purpose;

however, in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose;

when goods are bought by description from a seller who deals in goods of that description (whether the seller is the manufacturer or not) there is an implied condition that the goods shall be of merchantable quality;

however, if the buyer has examined the goods, there is no implied condition as regards defects which such examination ought to have revealed;

an implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade, if the usage is such as to bind both parties to the contract;

an express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith.

Sale by sample:

A contract of sale is a contract for sale by sample when there is a term in the contract, express or implied, to that effect.

In the case of a contract for sale by sample

there is an implied condition that the bulk shall correspond with the sample in quality;

here is an implied condition that the buyer shall have a reasonable opportunity of comparing the bulk with the sample;

there is an implied condition that the goods shall be free from any defect, rendering them unmerchantable, which would not be apparent on reasonable examination of the sample.

Conclusion:

Due to these reasons this act suits for everyone who wants to buy or sell. This act gives everyone clear understanding how to make contracts and how to buy or sell without breaching the contract. It also provides easy understanding of laws which one is right and which is wrong. It has all the terms implied within it. So, this is the most common and most important of all acts.

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